Calculator for Ethena, EigenLayer, Renzo Airdrops
DeFi strategies and airdrops.
In today’s newsletter, we will talk about:
Restaking: all you need to know
Airdrop Calculator: how much you can earn through Ethena, EigenLayer, Renzo Protocol, Etherfi, and Puffer Finance airdrop by using leverage
A Puffer Finance update
An EtherFi update
Restaking
The launch of EigenLayer on the mainnet and the recent airdrop have further brought restaking into the spotlight, but let's find out together what it's all about and why it's so important.
Restaking allows using the same tokens both for securing the main blockchain and for a series of third-party protocols such as oracles, bridges, or sidechains. One of the main limitations in the development of web3 infrastructure lies in the ever-growing need for validator nodes that enable these services to function while ensuring their security and reliability. In technical jargon, they're called AVS (Actively Validated Services), which are all applications that need to validate information to function correctly.
Before the advent of restaking, the only option was to create one's own network of validators, with all the associated costs and limitations. Truly securing a service requires a broad network with a high monetary value to prevent any malicious actor from taking control.
Hence the need to seek alternative solutions that simplify the launch of new dApps without compromising security. The solution is called restaking, which is a mix between a node-as-a-service and a leveraged financial operation, let me explain further.
Restaking is based on the principle that there already exist extremely secure networks of validators, where billions of dollars are locked as collateral, as seen in the case of Ethereum. So why not leverage those same locked ETH to validate more types of transactions? This way, both those staking and the validator nodes could receive double rewards, on one hand for validating transactions on Ethereum, and on the other for validating the transactions of the various services we mentioned earlier.
As one might infer, what is created is a situation where new protocols can leverage the existing restaking infrastructure, such as that offered by EigenLayer on Ethereum, as a node-as-a-service. At the same time, however, it creates a leveraged financial situation because the same tokens are used twice and accrue double rewards.
Making this solution even more intriguing are Liquid Restaking protocols like EtherFi, Renzo Protocol, or Puffer Finance, which allow users not only to increase yield but also to hold a liquid token usable as collateral for taking a loan or within additional DeFi applications.
Restaking represents a huge step forward for the web3 world as it lays the foundation for simpler and more cost-effective development, but it's not without risks. Many voices have risen to warn about the limitations, even Vitalik Buterin, the father of Ethereum, has expressed concerns and urged not to underestimate the critical points.
Restaking, in fact, generates a leveraged effect that increases profits but also risks. What would happen if something went wrong in validating a third-party service? What would be the effects in case of slashing at the restaking level? We cannot forget that just a few years ago, Ankr, a restaking protocol on the BNB network, was exploited, exposing the vulnerabilities of this type of system.
The risks are undeniable and are part of the nature of leverage, but at the same time, the benefits can have a disruptive impact on ecosystem growth and economies of scale. The key lies in balancing risks and benefits and creating an infrastructure designed to mitigate and absorb potential risks.
Calculator
I've prepared a calculator for you to help you estimate your Ethena, EigenLayer, Renzo Protocol, EtherFi, Puffer Finance, and Keld Dao: Airdrop Calculator
Feel free to make a copy to modify the parameters.
These are, of course, just estimates. For example in the case of Ethena the basic assumptions are:
- Current FdV (Market Cap), if the price changes, it goes up or down.
- Supply distributed as airdrop, it was 5% in the previous one, but there is no certainty it will be the same this time.
- Linear growth of TVL (Total Value Locked), if TVL shoots up now and then takes a long time to reach $5 billion, the airdrop would be more diluted. Conversely, if it grows slower now and faster later, early entrants would have an advantage.
- The values used for calculating leverage scenarios are based on current data but could be subject to change. Particularly in the manual loop, the cost of debt is variable, it's possible it could rise. Also, in the manual loop, you need to consider maintenance operations to avoid liquidation.
- ROI with leverage is calculated based on the scenario that the airdrop occurs after 120 days. It goes without saying that if the timing is different, it would change accordingly.
- All of this does not take into account transaction costs.
Everything mentioned previously remains valid.
If you interested on joining Ethena here you can find an invite https://app.ethena.fi/join/hfzka
Puffer Finance Update
Puffer Finance has just closed a new $18 million investment round with all the major VCs in the crypto world, including Coinbase.
With the launch on Mainnet, the new ETH staked on Puffer Finance also accumulates EigenLayer points. Additionally, there's currently a bonus of 5000 Puffer Finance points (about $100 at the current pre-market price, but it hasn't been traded too much until today) for each stETH or wstETH staked on Puffer.
The bonus is a one-time offer, but for the rest, you'll continue to accumulate the regular Puffer and EigenLayer points.
If you'd like to take a look: https://bit.ly/PufferFiAirdrop
EtherFi Update
Fluid has partnered with EtherFi, increasing the EtherFi points bonus to 3x and the LTV to 93%, which means you can now achieve leverage up to 14x.
For risk-averse individuals, this also means a very high yield opportunity as a liquidity provider.
If you’d like to take a look: https://fluid.instadapp.io/dashboard
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